85 % max lends not far off

Hiya

I feel that in the next few weeks there will be some lenders that will reduce their max lvr to 85 %.

Not so much because of risk mitigation per se, but a way to get their service levels back to a reasonable level, while reducing the inulx of FHOG buyers even further. The % of the new business with many lenders is still to highly weighted to FHOG buyers.

ta
rolf
 
If that is the case....it will kill the Real Estate market!

Not many people have 15% desposits...even second home buyers trading up.

For example lets say a second home buyer with 100k deposit after selling their unit want to trade up to 600k home. At 15% and after stamps....they won't be able to do it.

This will affect the whole market...sign of the times I guess...but a great way to ration credit to only the better risk people.

I look forward to picking up a few bargains....;)
 
This would definitely reduce the no. of buyers in the market as credit becomes difficult.

I suppose for ppl with savings/equity will be in the best position to buy as they are the only ones who would be able to get loans from the banks.

Cheers,
Oracle.
 
you'll know when ANZ does it that you better move quick.
W/ a few you can still get the 95s but you need that now all important track record.

Lots of FHBs going to be with the same lender for a while... unless rates go up and it gets too hard for them at 7%.
 
Hiya

No panic folks !

I said some ..................and I dont believe it will be a long term reduction, perhaps 6 to 12 mths max.

Most lenders will continue with their sad service levels trying to push through volumes they cant handle.

I suspect that the new savings rules and general redn to 90 % will slow new applications so that service levels will once again be sanish within the next 2 mths or so

ta
rolf
 
If that is the case....it will kill the Real Estate market!

Not many people have 15% desposits...even second home buyers trading up.

For example lets say a second home buyer with 100k deposit after selling their unit want to trade up to 600k home. At 15% and after stamps....they won't be able to do it.

This will affect the whole market...sign of the times I guess...but a great way to ration credit to only the better risk people.

I look forward to picking up a few bargains....;)
Sash,

Oh please! You're not serious are you? ;) There is so much equity in residential property broadly that reducing max LVRs to 85% would scarecely have any impact at all.

Might cut the odd over-stretched FHBer out of the market but that's it. Anyone who's been in the market for more than a year or two would certainly have a fair whack of equity in play. Remember 1/3 of the market own their homes outright. Lack of equity or over-gearing is not an issue in resi Australian property.

Cheers,
Michael
 
There is so much equity in residential property broadly that reducing max LVRs to 85% would scarecely have any impact at all.
I'd agree with Michael....

NAB tells us it has 17% of borrowers with LVRs > 85% (I'd guess the other banks are similar). 50% of owners don't have a mortgage, so approx 92% could buy with little or no cash input.

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I received Noel Whittaker's email newsletter this morning.

He said that ANZ were cutting their LVR on properties over $2 mill to 75%.

Only a minority section of the market I know, but it's part of the trend lower LVR's.

Anyway, it wasn't that long ago that you couldn't get a loan without a 20% deposit, so an 85% LVR on normal lending is hardly tough times.

Mind you; the younger folk from before my day (and even during my day)started saving hard for their homes as soon as they could because there was no other alternative - not like today.

It's not rocket science; take away the FHOG and many younger folk today will have no cash at all for a deposit, because their lifestyle is built around credit cards and no savings. That's the normal thing, sadly.

Without the FHOG the bottom end would stall, and even some of the middle price point due to higher-earning FHB's who live on credit.

The Gubbermint know this, and they know the Banks are now squeezing the purse strings, so they have to keep the Grant going as long as possible to prop up the market.
 
ANZs position here is simple and clear.

The price elasticity in this market segment in sheer dollar terms can easily be more than 20 % in current markets because of the limited amount of purchasers.

ta
rolf
 
Sash,

Oh please! You're not serious are you? ;) There is so much equity in residential property broadly that reducing max LVRs to 85% would scarecely have any impact at all.

Hi Michael

I suspect sash is just thinking about the section of the market that is relevant to sash! :rolleyes: While it may not kill the wider market as you and keithj point out I believe this would have a devastating impact on the bottom end. Coupled with the loss of the FHOG it would indeed be a killer for that part of the market, turning boom times into a waste land in short order IMO...
 
Maybe price reductions, but on the other hand, people will choose to rent instead. That in itself is not a bad thing ;) Either that, or they stay home with their parents.
 
Wow good to see Noel Whittaker is bang upto date as that only happened 6-8weeks ago.

Rolf is right 85% maximum lvr in the UK and in the US many lenders max out at 70% without some form of 2nd or private funding.

95% is a rarity and genuine savings is not a word normally associated with the First Home Buyer of today.
 
I reckon the bank tightening their lending criteria is basically going to negate the effects of the FHOG even if they extend it not many kids are going to be able to produce the criteria for the rest of the loan given the GS requirement i heard some are even demanding 12 months GS let alone 3 months. Not many youngsters would have 3 months unless they pre-empted it, or have been forced to save by their parents. All very well to say "Bad luck you didnt save" but the culture of gen-y is not to save, buy first, pay it back with interest, everybody wins. Now they decide they dont want to play that game anymore, fine i'll play theirs. i WILL reach my goal of at least 3 properties before retirement.

/end rant :)
 
I don't see what the big deal is with this Gen Savings :confused::confused:

Honestly, if you cant save at least a small deposit over time, how can you expect to pay a mortgage?? It's all very well to sell your car and come up with a deposit, but what are you going to do - sell a car every month to pay the interest bill??

I'm Gen Y, and I had gen savings for both my first 2 props - before it was ever a bank requirement. And currently "genuinely saving" for my 3rd, over a predicted timeframe of 10-12 months.

Read some of Kim5 posts re: savings - she's the Queen of it.

All just MHO

Chris
 
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